Battle raging at WH over for-profit college rules

02/20/2014

Education advocates and representatives of the for-profit college industry are flocking to the White House as the two sides spar over regulations meant to ensure schools are doing enough to prepare students for the job market.

Officials from the White House’s Office of Management and Budget (OMB), the Office of Information and Regulatory Affairs (OIRA) and the Education Department have held four meetings in the last week on the “gainful employment” regulations that are in the works.

Advocacy groups say the regulations have already been watered down under pressure from industry groups, while private colleges warn that overly restrictive rules could cost millions of would-be students access to education.

“Students aren't getting what they need to be prepared for a particular field,” Obama said. “They get out of these for-profit schools loaded down with enormous debt. They can't find a job. They default. The taxpayer ends up holding the bag. Their credit is ruined, and the for-profit institution is making out like a bandit.”

Late last month, the Education Department submitted is proposed rule to OMB for review. The regulations would spell out new criteria for determining whether certain higher education programs lead to gainful employment, including students’ ability to repay loans and their debt-to-income ratios.

The process reflects the administration’s second run at the regulations. An initial rule issued in 2011 was tossed out, after a federal court judge found fault with an important provision involving repayment rates.

The latest iteration, amended during a series of negotiated rule-making sessions late last year, scrapped that provision. Advocates say the proposal has been weakened in other areas as well.

“Even after the Department made multiple changes requested by the for-profit college industry representatives that dramatically weakened the draft regulation, the for-profit college industry representatives objected to it,” a coalition of more than 50 watchdog and advocacy groups wrote this month in a letter to Obama.

But private colleges say the latest text made public by the Education Department is still more stringent than the rule that was struck down two years ago. The Association of Private Sector Colleges and Universities (APSCU) argued during its White House meeting that the regulations would deny as many as 2 million people — including 140,000 veterans, 300,000 Hispanics and almost 500,000 African-Americans — access to college through the end of the current decade.

Further, APSCU spokesman Noah Black argued, the rule would single out for-profit institutions.

“It would predominantly impact students enrolled at private sector colleges, while not addressing outcomes and student debt issues across all of higher education,” he said. “Clearly, this has been designed to capture more programs, and as a result, more programs fail.”

It’s unclear how much the regulations, if finalized, would cost the for-profit college industry. The administration has labeled the rule economically significant, meaning it carries an annual price tag of at least $100 million.

The battle to influence the final language is only just beginning. The Education Department in the coming weeks will issue a preliminary version of the rule, which will be followed by public comment and additional revisions.

Once finalized, the rule is widely expected to face another legal challenge.

While the most recent language, made public in December, is seen as being at least as restrictive as the 2011 rule, opponents will have plenty of time to pressure the administration to loosen the rules.

Observers say colleges have claimed important victories in the early phases of rule-making.

“The changes did move toward something that was less rigorous,” said Ben Miller, senior policy adviser at the policy group New America Foundation, which supports the establishment of rules tamping down on for-profit schools.